Com­mer­cial prop­erty taxes sky­rocket amid va­can­cies

Calgary Herald - - FRONT PAGE - RYAN RUM­BOLT RRum­[email protected]­media.com

City coun­cil could hike res­i­den­tial prop­erty taxes as part of a “mul­ti­tiered” ef­fort to close a widen­ing gap be­tween com­mer­cial and res­i­den­tial bills, says a vet­eran coun­cil­lor.

Toronto-based firm Al­tus Group com­pared tax rates in 11 Cana­dian cities over 15 years and found com­mer­cial tax rates are at least dou­ble those paid by res­i­den­tial prop­erty own­ers in eight of the 11 cities sur­veyed. The re­port states the gap in tax bur­den be­tween Cal­gary busi­nesses and home­own­ers sky­rock­eted by 12 per cent this year, in­creas­ing the dis­par­ity be­tween those tax bases as the city grap­ples with a crip­pling down­town va­cancy rate.

Al­tus said Cal­gary had the high­est com­mer­cial tax rate in­crease in the coun­try for two years in a row, with a hike of 11.4 per cent in 2017 and an­other 9.5-per-cent bump this year. Those in­creases put Cal­gary’s gap at $3.06 in taxes paid by busi­nesses for ev­ery $1 paid in res­i­den­tial taxes, just above the na­tional aver­age of $2.90 to $1.

Some coun­cil­lors have sug­gested shift­ing some of the tax bur­den to home­own­ers by in­creas­ing res­i­den­tial taxes. And while that op­tion is still on the ta­ble, Coun. Ward Suther­land said clos­ing the com­mer­cial to res­i­den­tial gap won’t be solved by sim­ply in­creas­ing res­i­den­tial taxes.

He said the fix should be a mul­ti­tiered so­lu­tion, and could in­clude phas­ing in in­creased res­i­den­tial taxes while cre­at­ing dif­fer­ent clas­si­fi­ca­tions of busi­nesses with dif­fer­ent tax rates un­der the new city char­ter. “Whether it’s non- res­i­den­tial or res­i­den­tial, we’ve got to do it in a prag­matic, grad­ual man­ner so it’s not a se­vere shift,” Suther­land said.

The of­fice va­cancy rate in Cal­gary climbed to about 23 per cent in the first quar­ter of 2018, up from 20 per cent a year ear­lier. Those va­can­cies led to a re­dis­tri­bu­tion of the tax bur­den to some non-res­i­den­tial prop­erty own­ers out­side the core, such as re­tail­ers in the sub­urbs, to the tune of 10 per cent.

Coun­cil in­stead used $90 mil­lion in re­serve funds to soften the tax blow to of­fice build­ings sit­ting empty by cap­ping prop­erty tax hikes on busi­nesses at five per cent.

The city will do away with sep­a­rate busi­ness taxes and busi­ness prop­erty taxes next year in favour of a har­mo­nized tax, by con­sol­i­dat­ing the two bills and weigh­ing busi­ness taxes based on as­sessed prop­erty value.

With Al­tus pro­ject­ing an­other 17-per-cent bump to com­mer­cial tax rates in 2019, the Cana­dian Fed­er­a­tion of In­de­pen­dent Busi­ness is call­ing on the city to “com­mit to stop in­creas­ing the bur­den” on busi­ness own­ers by find­ing room in the city’s op­er­at­ing bud­get.

“The ra­tio that we cur­rently have is bad enough and en­trepreneurs de­serve prop­erty tax fair­ness,” said Am­ber Ruddy, Al­berta di­rec­tor with the CFIB. “Busi­ness own­ers are happy to pay for their fair share, but this goes beyond what’s rea­son­able.”

While the fed­er­a­tion isn’t ad­vo­cat­ing for res­i­dents to pick up all the tax slack, Ruddy said the city should look at bal­anc­ing the bur­den and slash­ing the bud­get “very closely.”

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